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DIFFERENTIATION
Link to the prezi presentation: http://prezi.com/wyeuamo5skfr/?utm_campaign=share&utm_medium=copy Definition A differentiation gap can be described as failure by a company to differentiate its products from that of other firms, but also within its own product line. Characteristics: *Company doesn't lead with innovative products but instead has to 'catch-up' with others *No proper defined focus on a specific segment or competitive advantage Differentiation is a process that makes consumers perceive your company differently Differentiating your company from others and each of your products different from each other, are two vital concepts for your firm. What is your company’s one thing? Once you stop following others, your direction can truly be your own. The perception of the Nintendo Wii is fun, Google is search, and Jeep is off-road. By clearly differentiating, each of these brands has become remarkable, and memorable to us. But, we could think, it was easier for these companies to differentiate: they have more resources. These companies have resources now, because they chose to focus and differentiate. All of these companies could likely have chosen different strategies than what they’re known for today. Differentiation gap is a constant challenge. Even more nowadays with the revolutionizing changes associated to globalizationt, a company needs to renew itself to keep up with the market dynamics. Diagnostic To determine whether or not a company is facing a differentiation gap, a series of questions can be asked: How do successful organizations differentiate themselves from the competition and maximize the profitability of their business? Case examples Search engine providers - Case study The search engine businesses had one major difficulty: They all provided the exact same service to their customer – a service that was very one-sided and that did not have an added value – namely one feature that increases the value of a product in the eyes of the customers and thereby differentiates from competitive products. Basically, there was no compelling difference between the services that one engine provided as opposed to the services of an other search engine. Furthermore search engine businesses lost the focus on what their JTBD (Jobs-to-be-done) had to fulfill. It happened thas as Google introduced their “Google search” engine, having re-modeled their platform and their system by making it more efficient to their customers, those that seek publicity for their purposes in the search, as well as for the web-searchers. Google thereby managed to focus and fulfill the JTBD by a browser and differentiated from competition by providing a more meaningful value to their actual paying customers. Using the diagnostics, this case provides the following insights: *They provided a truly differentiated value to their paying customers by providing an engine that could be used as marketing tool by their clients – i.e. by letting customers pay for their ads to show up above others. *They assured the alignment between business design and value discipline for competitive advantage by realizing the most intelligent way on earning money on what simple service they provided, aligned with the capabilities they had. Today, Google has continued to differentiate from the search engine market by building up a portfolio of different services like their own social network, Google +, their own E-Mail Service, Google Mail etc.. With daily average searches of about five billion, one hundred thirty four million (5,134,000,000) they are the top player in their business. Solution: Escaping the gap To escape falling into a differentiation gap only one measure can be taken: executing sections of the business model canvas in ways competitors have never thought of doing. Create solutions based on hypothesis drawn from market analysis and validate your results. Talk to your key partners and key distributors. Make cost/benefit analyses, and be sure to calculate how big the impact of each differentiation attempt would be. Looking at the business model canvas, we can identify key elements which are important within each section. *'Key activities' Your company has to take advantage from its” Business Design” and make the necessary changes to make the difference. The most important activities have to create a value proposition. See Evaluating your business design *'Value proposition' In order to be different, your company has to use its competitives advantages to create a value proposition. It has to propose something that the competitors don’t have. :: Products ' :: Differentiate its products with high quality, an innovation or a low price. :: '''Services ' :: Improve your services. It can be different from the competitors thanks to its rapidity, its modernity, its availibility, its accessibility or its efficacity. :: '''Customer relationship :: Make the difference by creating a strong relationship with your customers. More and more companies put money into CRM (Customer relationship management). See more *'Channels' **Make the difference thanks to your distribution channel. Indeed, your channels can create a value proposition. There are many options: **Look at the places where your competitors are not established. **Fnd something to be more visible: opening your own stores, training your salesmen in order to make every employees a brand ambassador. **Change the distribution intensity **Sell on internet (Website, Smartphones…) or find new distribution channels See more 1 2 *'Customer segment' In order to propose a new offer with a value proposition you have to target the customers who are waiting for something new and who can take an advantage from your offer. In this way, you have to define different groups of customers and make a segmentation. *'Key ressources' In order to be more efficient than your competitors in your process, you have to define and use your capabilities and assets. In this way, you must take the time to understand what cabalities you have and what capabilities are able to make the difference. Then you have to see how you can use it to be more competitive in your process. Once you have analyzed the current situation of your company and the different elements of your business model, you should’ve localized areas in which there is no significant difference to our competitors. Another way you could escape this gap is by innovating applying the Radar of innovation. Every company has different problems, giving an absolute solution that worked for all would be ridiculous, thats why the solition we propose is a general one, a radar, which settles you in the middle and lets you move to where you need depending on your differentiation situation. This tool will allow you to see which innovation provides value to the consumer, to see a detailed walkthrough see Radar of Innovation. References [http://www.bibme.org/# MIT Sloan Management Review. (n.d.).MIT Sloan Management Review RSS. Retrieved November 29, 2013, from http://sloanreview.mit.edu/article/the-different-ways-for-companies-to-innovate/#side4]